The Brazilians Behind the Consolidation in Beer

Even before the approach to SABMiller, it was clear that the Brazilian deal makers who helped put together Anheuser-Busch InBev had sprawling ambitions.

The men behind 3G Capital, the private equity firm with origins in Brazil, have established themselves as the most audacious deal makers of the last decade. Their motto, “dream big,” has driven them to strike a series of mega-deals, moving into beer, packaged foods and restaurants.

First, they created the world’s largest brewer, using their Brazilian company AmBev to merge with InterBrew of Belgium and then orchestrate a surprise takeover of Anheuser-Busch, the maker of Budweiser, in 2008. Since then, Anheuser-Busch InBev has continued to swallow up smaller brewers around the world.

In 2010, 3G Capital moved into the fast-food market, acquiring Burger King and taking the company private.

In 2013, it opened a third front in its international expansion, partnering with Warren E. Buffett on a $23 billion takeover of H.J. Heinz, the maker of ketchup, beans and other cupboard staples.

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The five founding partners of 3G Capital sit on the board of Anheuser-Busch InBev, which produces Budweiser.CreditSpencer Platt/Getty Images

Last year, it was back to fast food. 3G Capital, again with the assistance of Mr. Buffett, acquired the Canadian doughnut chain Tim Horton’s and merged it with Burger King. The combined company, renamed Restaurant Brands International, appears to be intended as a platform for yet more acquisitions.

As if all this were not enough, 3G and Mr. Buffett were at it once again this year, using Heinz to acquire Kraft, the packaged foods giant. The deal, worth more than $80 billion, was an indication that for 3G Capital, big companies are never big enough.

Now, 3G Capital — whose five founding partners sit on the board of Anheuser-Busch InBev — appears to be pursuing the deal many observers said could never be done.

The 3G partners’ familiarity with beer dates to the 1980s, when they invested in Brahma, a Brazilian brewery.

“Brahma became the perfect laboratory for their business model, based in meritocracy and obsessive cost-control, among other things,” said Cristiane Correa, who wrote a book about 3G called “Dream Big.” “With time they acquired other breweries and just replicated the model.”

That same strategy is the blueprint at all the firm’s investments, including Kraft Heinz and Restaurant Brands International.

Ms. Correa said 3G partners have said that they like more traditional businesses that allow them to replicate the model — something that would be hard to do in, say, the tech industry. Even if the firm succeeds in acquiring SABMiller, it is unlikely to be its last mega-deal, she said.

”They do dream big,” she said. “And their model is based in constant growth. The question is how much more they can grow.”

With the approach to SABMiller, 3G Capital appears to be betting that antitrust regulators around the world will bless a merger of the world’s two largest brewers. It is also betting that it can muster the financial resources, and the focus from its partners, to execute what would in some ways be the most audacious deal in its relatively short history.

Should 3G Capital succeed, SABMiller will probably be subject to the same treatment as other companies under the Brazilian firm’s control. Zero-based budgeting, a system that requires managers to justify all expenses on an annual basis, is likely to be put into effect. Staff members will be purged. Any unnecessary expenses will be eliminated.

Though this rapacious cost-cutting is just the sort of behavior that Mr. Buffett says he abhors, 3G Capital appears to redeem itself in his yes because it has shown no interest in selling its investments for a quick buck.

Instead, like Mr. Buffett himself, 3G Capital says it buys companies with the aim of holding on to them for generations. To provide liquidity for investors, some shares are taken public.

3G isn’t buying things to sell, Mr. Buffett said earlier this year. “The other private equity firms, they buy companies with the idea of I.P.O.-ing them or selling them to a competitor.”

It remains unclear whether Mr. Buffett will be involved in any takeover of SABMiller by AB InBev, or whether the deal will ever get done.

What is clear is that such a deal would be in line with 3G Capital’s big dreams. Jorge Paulo Lemann, one of 3G’s founding partners, has understood the power of beer to mint fortunes for decades now.

“I was looking at Latin America and who was the richest guy in Venezuela? A brewer,” The Financial Times quoted Mr. Lemann as saying in 1989. “The richest guy in Colombia? A brewer. The richest in Argentina? A brewer.”

If he and his partners succeed in taking over SABMiller, Mr. Lemann, already one of the richest men in the world, will become even richer.